ABSTRACT: This Chapter discusses the tensions between copyright law and competition and some of the ways through which copyright law itself works to advance competition policy goals. It shows how competition policy goals and anti-monopoly measures shaped the design of copyright since the Statute of Anne, and the notion of limited exclusive rights operating within a competitive market system is crucial to copyright law’s design.

The Chapter offers a three-dimensional framework, consisting of considering incentive sufficiency, relative capacity to innovate, and transaction costs, to explain some key elements of copyright law: the limited term of copyright, limitations on subject matter, fair use, and the first-sale doctrine. It shows how these limitations on copyright can ensure that the copyright may not result in excessive static losses resulting from unconstrained market power, and how they can minimize dynamic losses by ensuring that copyright is not used to hinder future innovation.